Transparency and Fairness in the Music Licensing System

On March 19, 2019, fitness giant Peloton made news when they were hit with a $150 million lawsuit for failing to secure the licenses necessary to keep the music pumping for high octane workouts. Many were shocked to hear this, as they expected a multi-billion dollar company, such as Peloton would have more than enough resources to understand which music licenses were necessary to keep the music playing. The National Music Publishers Association, however, still claimed Peloton did not pay for the right music licenses. If that is not clear for a multi-billion dollar company like Peloton, how are small businesses expected to comply in the current music licensing ecosystem?

Small businesses — including bars, restaurants, wineries and other public venues — across the country want to play music and secure the licenses needed for the enjoyment of their customers and to support local musicians. Whether music is being played via CD, DJ, band, a streaming platform, karaoke, iPad, radio, television or otherwise, it can be difficult for these public venues to understand what licenses are needed to streamline payments to rightful copyright owners because of the lack of transparency and fairness that exists in the current music licensing ecosystem.

In March, a bar owner in Mississippi named Harvey Freelon struggled to navigate the confusing, opaque and often cumbersome process: “it’s difficult trying to pay those fees. You don’t know who owns what music. You’re basically paying it blindly.” Similarly last year, a winery owner in Nebraskastruggled with the complicated process when attempting to play live music at his establishment. “They [the PROs] wouldn’t identify themselves, and they try to trap you into things,” said Les Meyer, owner of Capitol View Winery & Vineyards in Lincoln.

Everyone in the music marketplace benefits when current and accurate information about copyright ownership and licensing is easy to see and access. Unfortunately, the current music licensing system is not perfect.

With this said, there are a few actions to be taken that would help the music marketplace thrive:

The most significant threat to a fair and transparent music licensing system is the Department of Justice’s ongoing review and possible termination of the consent decrees governing ASCAP and BMI. These decrees provide an efficient way for businesses to play music while ensuring songwriters and copyright holders are fairly compensated. Eliminating or sunsetting these decrees would create chaos in the music marketplace.

Beyond preserving the decrees, the creation of industrywide licensing and ownership databases would create a fair and transparent system that would allow businesses to locate the songs they’d like to license while streamlining payments to artists.

Finally, eliminating the “Black Box” would provide greater clarity in the royalties that flow between licensees and actual songwriters.

For the MIC Coalition, transparency and fairness are more than simple buzzwords. They are key to building a more rational music licensing system that will help drive the future of the music industry.